Decided On, 18 July 2018

At, High Court of Judicature at Madras

By, THE HONOURABLE MR. JUSTICE M.V. MURALIDARAN

Judgment Text

(Prayer: Revision Petition filed under Section 115 of C.P.C., against the fair and decreetal order dated 07.10.2005 in R.E.A.No.203 of 2000 in R.E.P.No.94 of 1998 in O.S.No.441 of 1992 on the file of the Additional Subordinate Judge, Salem.)

1. This revision is directed against the order dated 07.10.2005 in R.E.A.No.203 of 2000 in R.E.P.No.94 of 1998 in O.S.No.441 of 1992 on the file of the learned Additional Sub-Court, Salem, dismissing the petition filed under Section 47 of the Code of Civil Procedure, 1908.

2. Briefly stated, the case of the petitioner is that the petitioner, who is a third party, had filed R.E.A.No.203 of 2003 before the Executing Court stating that the property brought for sale in the Execution Petition originally belonged to the second respondent, who entered into an agreement of sale on 01.12.1990 for a sum of Rs.6.50 lakhs with the petitioner herein, and after paying the considerable amount, there was only a balance of Rs.60,000/- to be paid. The petitioner was always ready and willing to perform his part of contract by paying the balance sale consideration. But the second respondent failed to comply with the same.

3. The petitioner has filed the suit being O.S.No.797 of 1992 for specific performance and the same was decreed on 04.03.1993. Pursuant to the decree, sale deed was executed and the petitioner had taken delivery of the property. According to the petitioner, the respondents in cahoots with other creditors filed I.P.No.36 of 1993 and obtained collusive decree on 03.02.1994. The Official Receiver filed I.A.No.92 of 1994 in I.P.No.36 of 1993 to set aside the sale deed executed in favour of the petitioner and the same was pending.

4. According to the petitioner, the first respondent obtained decree against the second respondent and based upon the decree, the first respondent brought the property purchased by the petitioner for sale. As per the decree obtained by the petitioner, the property is his absolute property and neither the first respondent, nor the second respondent has any right over the same. Hence, the petitioner has filed petition seeking to set aside the decree and judgment passed in O.S.No.441 of 1992 and also not binding on the petitioner.

5. The first respondent has filed counter stating that by depositing title deeds, the second respondent borrowed a loan and since he failed to repay the same in time, the first respondent filed the suit O.S.No.441 of 1992 to recover the mortgage amount and the same was decreed on 25.09.1992. It is stated that as per Section 22 of the Insolvency Act, the debt secured by mortgage of title deeds cannot be questioned. Even though the second respondent was adjudicated as Insolvent, there is no bar on the part of the first respondent to proceed to execute the mortgage decree. The petitioner has no locus standi to question the decree obtained by the first respondent against the second respondent for the reason that the debt is a secured one and prayed for dismissal of the petition.

6. Before the Executing Court, the petitioner examined himself as P.W.1 and marked Exs.A1 to A11 were marked. The first respondent examined himself as R.W.1 and no document was marked.

7. Upon consideration of the rival submissions, the Executing Court dismissed the petition filed by the petitioner. Aggrieved by the same, the petitioner has filed this revision.

8. I heard Mr.R.Siddharta for M/s.T.R.Rajaraman, learned counsel appearing for the petitioner and Mr.T.D.Vasu, learned counsel appearing for the 1st respondent and also perused the materials available on record.

9. The learned counsel for the petitioner submitted that the Executing Court had failed to see that the admission of the first respondent about the receipt of amounts pursuant to the agreement by the second respondent from the petitioner would dis-entitle the first respondent from claiming any relief. He submitted that the moment the deed of sale was executed, the rights flow to the purchaser from the date of agreement of sale. The Executing Court should have considered whether the first respondent would obtain any right pursuant to the deposit of title deeds especially when an insolvency application viz., I.P.No.36 of 1993 was pending. He argued that the Executing Court had failed to see that the petitioner was not a party in O.S.No.441 of 1992 and that the sale executed by the Court in pursuance of the decree for specific performance was not yet set aside. In support of his submissions, the learned counsel relied upon the decisions in Gangaibai Gopaldas Mohata v. Fulchand and others, reported in (1997) 10 SCC 387 and Kancherla Lakshminarayana v. Mattaparthi Shyamala and others, reported in (2008) 5 MLJ 252 (SC).

10. Per contra, the learned counsel for the first respondent submitted that the debt secured by mortgage of title deeds cannot be questioned as per Section 22 of the Insolvency Act and even though the second respondent was adjudicated as insolvent, that will not bar him to proceed to execute the mortgage decree. He submitted that the petitioner has no right to question the decree obtained by the first respondent and the Executing Court was right in dismissing the petition filed by the petitioner.

11. The claim of the petitioner is that he entered into an agreement of sale with the second respondent and pursuant to the decree in O.S.No.797 of 1992, he also got the sale deed executed and he is the absolute owner of the property.

12. According to the first respondent, the second respondent borrowed money from him and for security of the loan amount advanced to him, the second respondent deposited his title deeds in favour of the first respondent and based upon the mortgage decree, now the first respondent was taking steps to execute the mortgage debt in the Execution Petition.

13. It appears that while dismissing the petition filed by the petitioner, the Executing Court observed that since the decree obtained by the petitioner was under dispute by the Official Receiver by filing I.A.No.62 of 1994 in I.P.No.36 of 1993, it need not want to adjudicate upon the genuineness of the decree obtained by the petitioner in O.S.No.797 of 1992.

14. R.E.P.No.94 of 1998 has been filed by the first respondent to execute the decree obtained by him in O.S.No.441 of 1992 against the second respondent, wherein the petitioner filed the claim petition. Admittedly, the debt due to the first respondent is the secured one.

15. Referring to Section 28(6) of the Insolvency Act, the learned counsel for the first respondent submitted that even if the second respondent is adjudicated as Insolvent, the first respondent is entitled to realise the secured debt.

16. To rebut the same, the petitioner has not produced any materials. Therefore, when the statute itself clearly permitted the first respondent to secure his debt, the petitioner is estopped from contending that the first respondent has no right over the mortgaged property.

17. The agreement of the petitioner is dated 01.12.1990 and he filed suit O.S.No.797 of 1992 for specific performance and the same was decreed on 04.03.1993. R.E.P.No.163 of 1993 was filed to execute the sale deed in favour of the petitioner and the the sale deed executed and registered on 18.10.1993. Pursuant to the execution of the sale deed, delivery of the property was effected on 03.08.1994. The suit of the first respondent is one on a mortgage and decree was passed on 25.09.1992. Therefore, the decree in O.S.No.441 of 1992 is well before the decree passed in the suit filed by the petitioner.

18. Since the debt being one which was a secured debt on a mortgage, no sale agreement or even sale can upset or override the decree obtained by the first respondent. Any such transaction of sale can be only subject to the mortgage and the decree. Mere agreement to purchase does not confer title or right in the property.

19. It is the admitted case of the petitioner that there was a resistance to possession and in that regard a petition was filed. After the second respondent adjudicated as insolvent, the property of the insolvent cannot be delivered to the petitioner.

20. Though the petitioner had produced Exs.A1 to A12 to show transactions between the first respondent and the second responden

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t and also suit proceedings in O.S.No.797 of 1992, those documents would not in any way help the case of the petitioner. The first respondent has a legitimate right to initiate and/or execute the decree obtained by him and the petitioner has no right to object the execution proceedings. 21. In view of the categoric finding and peculiar facts and circumstances as aforesaid based on the documents on record and/or factual position, I do not propose to delve into the various decisions relied by the learned counsel for the petitioner. No valid grounds have been made out to interfere with the order of the Executing Court. The order of the Executing Court is well founded warranting no interference by this Court in exercise of the power under Article 227 of the Constitution of India. 22. In the result, the Civil Revision Petition is dismissed. No costs. Consequently, connected miscellaneous petition is closed.